LETTERS TO REAL ESTATE

Published
4:00 am PDT, Sunday, April 22, 2007

A closer look sows doubts about solar

Editor -- The article about solar power was more like an advertisement from a solar power contractor than a critical review of its cost efficiency. Rather than believing the claims of the contractors or the owners of a system, what is needed is a review by an objective third party.

The president of Sun Light and Power says an average home system has a final cost of $20,000. Pertinent information, such as how many kilowatts this system is and how many kilowatt hours per year it will produce are not given.

Over its 25 to 30-year life span, factoring in a 6 percent annual inflation rate for electricity, it is stated this system will produce $60,000 in electricity, which equals $40,000 in savings. But this doesn't take into account that $20,000 invested at 5 percent interest per year compounded monthly yields almost $90,000 at the end of 30 years.

The other examples in the article also lack a healthy dose of skepticism. One individual paid $27,000 for a 4.8 kilowatt system and claims to have nearly recouped the cost in five years. Accurate information is needed as to how many kilowatt hours this system generated. You are implying that this system generates $5,000 or more of electricity per year. Even at 29 cents per kilowatt hour (201 to 300 percent of baseline), that would be about 17,000 kilowatt hours a year, which is at least twice what a 4.8 kilowatt system in the Sunset is capable of generating.

ROBERT KARIS

San Francisco

Calculations dim benefit of solar power

Editor -- The future of solar power may not be as sunny as indicated in last Sunday's Chronicle article ("Solar in the city," April 15) if one closely examines the costs of some of the examples noted.

In one instance, the owner of a home in the Sunset neighborhood did not include the cost of the solar cell system investment when claming that the $27,000 cost was nearly recouped in five years. However, when the $27,000 is amortized over the 25-year life of the system and a reasonable interest rate of 6 percent is used, the investment cost is $2,088 per year. Thus, the true savings is only about $14 per year, which is a long way from recouping the $27,000 cost in five years.

The basis for calculating the first example is as follows: A 4.8-kilowatt system that runs eight hours per day would produce 38.4 kilowatt hours per day. At an average cost of 15 cents per kilowatt hour, the power produced is worth $5.76 per day, or $2,102.40 per year.

Paying off the $27,000 cost of the system at a rate of 6 percent for its 25-year life costs $173.96 per month or $2,087.52 per year. Thus the true savings is $14.88 per year -- which is nowhere near paying for the system after five years.

A second example of an installed solar cell system shows similar results. It was claimed to save electric power costs of $1,500 per month, which was reasonable for the size noted. The system cost $203,000 installed. Amortizing this system over its 25-year life at a 6 percent rate costs the owner $1,308 per month, which results in a true cost saving of only $192 per month -- not anywhere near the $1,500 mentioned.